Clock ticking for Telkom top post
The investor market expects current head of Telkom's South African operations, Nombulelo “Pinky” Moholi, to be appointed as group CEO within the next few days, a move that will be broadly welcomed.
Telkom's acting CEO, Jeffrey Hedberg, will exit the company at the end of this month, and speculation is rife over who will take up the top post - and face the task of turning the operator around.
Several names have been bandied around for the position as Telkom CEO, including Moholi; the company's former CFO, Peter Nelson; and Denel CEO Talib Sadik.
Although Telkom refuses to respond to speculation, the market expects Moholi's appointment to be formally announced within days on the back of news reports indicating she has been approved by Cabinet.
Telkom says the process of hiring a new CEO “is under way and an announcement will be made in due course”.
Government, trade unions and the market are expected to welcome Moholi, if she is appointed, as she is technically competent, respected by the market, and would be the first black woman to lead the company.
However, analysts warn that Moholi will have a large task ahead of her, as Telkom needs to focus on strategic growth areas to offset dwindling revenue from landlines. It also needs to entrench its mobile arm, 8ta, and sort out its African operations.
Telkom has been without a permanent CEO since the middle of last year, when CEO Reuben September stepped down early. His departure was followed by that of CFO Peter Nelson.
Hedberg was appointed in an acting capacity, but will step down from the position when his contract runs out at the end of this month, after only seven months at the head of the company.
In February, Telkom placed advertisements in several publications in a bid to recruit a new CEO. The closing date for applications, which were handled by auditing and accounting firm Deloitte, was 9 February.
However, as Hedberg's exit looms closer, analysts expect the operator to appoint someone from inside the company as time is running out, and Moholi has been cited as the most likely person.
The market seems to have accepted that Telkom will promote Moholi to head up the company. News reports are rife that an announcement will be made this week.
It was widely speculated that government would appoint a CEO of its choosing before its Class A shares expired earlier this month.
Although its rights under the golden share have expired, analysts expect the state, as Telkom's single biggest shareholder, with 39.8%, to still have a large amount of sway over who gets the top post.
Should Telkom appoint Moholi, government will be pleased, and the market will welcome her appointment as she is experienced in the industry, say analysts.
Steven Ambrose, MD of WWW Strategy, says Telkom doesn't have the time to find a new CEO from outside the company. He says there is a shortage of well-qualified quality candidates in the telecoms sector, and Telkom will most likely appoint from inside its ranks.
Ambrose expects government to have a large say in who heads up the company next, as it is the largest shareholder and “holds the purse-strings”. Government, trade unions and the market would all welcome Moholi's appointment, he comments.
Moholi is experienced at dealing with demands from all stakeholders, says Ambrose. However, if government continues with its history of interference, she will battle to turn the company around, he notes.
Irnest Kaplan, MD of Kaplan Equity Analysts, says Telkom's low share price, which is performing below where it should be, is an indication of negativity from investors who have been uncertain over the company's future for the past few years due to several management changes.
Kaplan says Telkom has potential, but if appointments are made as a bid to be government-friendly, that would be a “grave mistake”. He believes Telkom needs capable people to take advantage of its potential.
Chris Gilmour, Absa Investments analyst, says Moholi's appointment is a “done deal” as the company would not have recruited her back from Nedbank in early 2009, without something “big” in mind.
Gilmour believes an internal appointment makes sense, as Moholi will know the company, having run the bulk of its operations for several years, and is trusted. He says, at this late stage, he does not see anyone else being a contender.
However, notes Gilmour, Moholi will face a monumental task as she will have to implement a turnaround strategy. “It's an unenviable position to be in.”
BMI-TechKnowledge MD Denis Smit says the market expects someone to be announced soon, and Moholi's name has been suggested. He points out that the new CEO will have to focus on sorting out Telkom's African operations, reenergise 8ta and develop a turnaround strategy.
However, says Smit, Moholi is a technically competent person and understands the industry.